Z Corp has 100000 of accumulated ep at the beginning of the taxable year It has

Z corp has 100000 of accumulated ep at the beginning

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Question 10Z Corp has $100,000 of accumulated e&p at the beginning of the taxable year. It has a projected taxable income of $50,000 this year. It declares and pays a dividend of $5 per share on each of its 30,000 shares at the end of the first quarter of its fiscal year. But thistime, the income projections prove incorrect, and the corporation earns $100,000 in the year of the distribution, and pays $20,000 in federal income taxes. All of the earnings are attributable to specific events occurring after the distribution. What is the result of the distribution to the shareholders and the corporation? What is the corporation’s accumulated e&p as of the beginning of the next year? a)Total dividend of $150,000; accumulated e&p of $100,000. b)Total dividend of $80,000; accumulated e&p of $100,000. c)Total dividend of $150,000; accumulated e&p of $30,000. Under §316(a) the Question 11Z Corp has $140,000 of accumulated e&p at the beginning of the taxable year. It has a projected taxable income of $50,000 this year. It declares and pays a dividend of $5 per share on its 20,000 class A common shares midway through its taxable year. Its other 10,000 shares are in class B common stock on which dividends are regularly declared only after dividends have been declared and paid on the other, class A, common stock and certain performance goals are met. This later stock received its $5 dividend at the end of the corporation’s fourth quarter.
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But this time, the income projections prove incorrect, and the corporation loses $30,000 in the year of the distribution, mostly attributable to specific events occurring after the first distribution on the class A shares but before the distribution to the class B shares.What is the result of the distribution to the shareholders and the corporation? What is the corporation’ s accumulated e&p as of the beginning of the next year? a)Total dividend distribution of $100,000 to class A; total dividend distribution of $10,000 and return of capital of $40,000 to class B; no accumulated e&p.
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